IPE’s new service for pension funds
IPE-QUEST.com is a new service which allows pension funds and other institutional investors to carry out asset manager searches through the internet. Designed to meet the needs of these investors and their consultants, IPE-QUEST.com is founded on three principals:
p confidentiality - the investor/ consultant’s identity is never revealed
p no fees – investors/consultants use the service free of charge
p no obligation - there are no conditions placed on investors/consultants using the system
Is it a Request for Proposal service? Absolutely not. IPE-QUEST.com is part of the first step to finding the right manager for a mandate. And it isn’t just for pension funds. Any institutional investor interested in appointing an external asset manager - pension funds, insurance companies, foundations, banks, corporate treasuries, even other asset managers - can use IPE-QUEST.com during the initial search.
So how does it work?
p investors/consultants place Quests - manager searches - onto the system by completing an online questionnaire which is emailed to IPE-QUEST.com
p the investor/consultant will then be contacted to verify the information and check the details before the Quest is placed live on the system
p asset managers search the system for Quests they are qualified to manage and pay a small fee to submit online application forms through IPE-QUEST.com (see panel)
p the data from the application forms is collected electronically by IPE-QUEST.com and, on an agreed date, is forwarded to the investor/consultant as an Excel spreadsheet
p it is then up to the investor/consultant to decide if they want to contact any manager/s whose details are of interest
During the initial three month launch period eight European and two US investors placed mandates onto IPE-QUEST.com with a total value well in excess of $500m. During the same period over 60 asset managers signed up to search the system and submit online application forms.
Confidentiality is the key - many pension funds are resentful of any publicity surrounding the process of searching for and appointing asset managers – but two of the pension funds which helped IPE-QUEST.com during the initial research have been kind enough to agree to make public statements about the system.
Gerrit Russelman, Director Equity Investments, PGGM Pensioenfonds in the Netherlands said: “Our conclusion is that we think IPE-QUEST.com is a good way of starting a possible manager-relationship.” And from Karel Stroobants, Deputy General Manager, VKG in Belgium: “I am convinced that this initiative will add value to the search process initiated by pension funds, and give the opportunity to small funds to approach their searches in a more professional way and to run them more independently.”
Since then IPE-QUEST.com has also received very favourable comments (which must remain anonymous) from a pension fund which placed details of a European equities mandate onto the system, stating that: “This is without any doubt valuable information.”
So it would appear to work for pension funds, but does this translate into success for asset managers? It is a little early to judge since the first Quests closed at the end of July and no appointments have yet been made.
However, asset managers using the system have already been contacted in response to their applications. Robeco Group emailed IPE-QUEST.com to say: “We have received an invitation from a European pension fund to provide information regarding our mid/small cap capabilities. We had not previously dealt with this pension fund and asked them for some additional details about themselves. This invitation is as a result of our application submitted via IPE-QUEST.com - it works.”
Institutional investors may place their mandates onto the system via the Placing Quests page. Details of the Quest are emailed to IPE-QUEST. We will then telephone the investor before placing the Quest live on the system anonymously, for free and without obligation.
IPE-QUEST.com is password protected so that only asset managers which have bought credits can fully search the system and apply to the Quests. Asset managers pay in advance for their credits and then “spend” one credit each time (and only when) they submit an application form. To buy credits and establish an account asset managers must contact IPE-QUEST.com by email: email@example.com or by telephone on +44 171 261 0666. Once an account has been opened asset managers can then buy further credits online. Credits are priced at:
10 = £ 450
25 = £ 1,000
50 = £ 1,750
75 = £ 2,250
100 = £ 2,500
Asset Managers search for Quests they wish to manage. Quests are displayed showing the asset class and type, region, size and closing date, so the display may show: European small/mid cap equities, US$10-50m, closing date 29 October 1999. Any manager interested in knowing more about this Quest can then click for further details. It is at this stage that they will be asked to give their Username and Access Code to take them on to the next stage. The system then displays further information about the particular Quest for instance: This search has been instigated by a European pension fund. Managers must have a minimum 5 year track record and EUR1000m under management within this asset class.
Asset managers can then move onto the online application form which requires them to give the information listed below. IPE-QUEST collects the data and then forwards it to investor in Excel format after the closing date:
1. institutional assets worldwide
2. institutional assets in asset class
3. no. of institutional clients in asset class
4. benchmark used for asset class
5. performance record to a set date
6. your 1/3/5 year performance
7. benchmark 1/3/5 year performance
8. the 1/3/5 year tracking error
9. base currency of performance
10. is performance GIPS/AIMR compliant
11. 25 words qualifying performance
12. 25 words on philosophy and process
13. segregated accounts yes/no
14. pooled accounts yes/no
15. management group name